The world’s largest cryptocurrency by market capitalization started off Thursday on a small retraction.
After spending weeks to consolidate ahead of the $23,000 resistance, bitcoin fell from that floor on February 5. Today, the asset reached its lowest point in the week trading at around $22,500 at this time of writing.
Reason For Bitcoin Retraction To $22500
The most likely reason for this fall is due to recent statements from the chairman of the Federal Reserve, Jerome Powell.
On Tuesday, the chairman spoke before the Economic Club of Washington, D.C. in an interview with David Rubenstein.
During the interview, Powell discussed the status of the American economy and the likelihood that the government would be able to control inflation.
The head of the Federal Reserve was not optimistic about the likelihood of decreasing interest rates in the near future. In fact, Powell added that the Fed will almost certainly continue to raise interest throughout the majority of 2023.
“The base case for me is that we’ll have to do more rate increases,” Powell said during the interview. “And then we’ll have to look around and see whether we’ve done enough.”
This statement, combined with the reports that American inflation is far from being under control, threw a bucket of cold water into investors looking to cash-in in on the risky assets market.
CPI Report Next Week
Since this announcement, bitcoin lost nearly 4% and its value, and the currency’s performance is nothing like the one seen during January’s rally.
In all likelihood, BTC will trade sideways and continue to test the $23,000 level up until February 14, when the Fed will announce the Consumer Price Index report for January.
The Consumer Price Index (CPI) is a measure of inflation developed by the United States Bureau of Labor Statistics (BLS).
The CPI is one of the most awaited reports due to the importance it holds over riskier assets like Bitcoin, and the fact that it provides data that analysts can use to “predict” the Federal Reserve’s next moves.
If the reports return a more optimistic view on how America is dealing with its inflation levels, the likelihood that bitcoin goes up increases.